From a small business point of view, I am not too impressed with the measures announced by George Osborne in this week's Emergency Budget.
NIC break for new start-ups outside the south east
It is unfortunate that this measure is only aimed at new start-ups and it will provide no relief whatsoever for existing businesses who are struggling to keep on top of PAYE liabilities. I look forward to seeing the anti-avoidance rules for this as I can see a flurry of companies closing down and restarting as 'new start-ups' to take advantage of the NIC break.
Cut in corporation tax for small companies to 20%
It is estimated that this will help approximately 850,000 companies throughout the UK, but I would be interested to know how many of these are actually making profits. There is no benefit from a reduced tax rate if you are not even making profits.
Increase in NI threshold
There is some relief here for small businesses that will benefit from the increase from £110 to £131, although this could well be offset by an increase in the NIC rate from April 2011, which has not been ruled out.
Extension of EFG scheme
I am a big fan of the Enterprise Finance Guarantee (EFG) scheme as I have had first-hand examples of how this can help clients obtain funding, I am, however, shocked and disappointed that the existing scheme has only helped around 2,000 small businesses. This backs up my belief that the funding is being given to bank managers who are unwilling to use it, or who are even unaware of it.
Increase in entrepreneurs’ relief to £5m
This is very welcome but I question how many small business owners this will actually be of relevance to; in the short term at least, I would suggest very few.
Capital allowances
The reduction of writing down allowances from 20% to 18% will certainly hit small businesses and will not encourage investment. The reduction in the Annual Investment Allowance to £25,000 has been described as focusing support on investment by smaller businesses. I have to disagree. I would question how many small businesses ever used anywhere near the full allowance previously available.
I would be interested in hearing your views on the Budget and how it affects you and your business. One thing I know for certain is that it means update courses for all the staff.
Who’s going to pay for that I wonder? Ah well, at least they are tax allowable…
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